Contract upheld for Medicaid

Unicare deal under fire for lacking provider network in state

The Kansas Department of Administration upheld on Wednesday a decision to give a multimillion-dollar contract to manage Medicaid in Kansas to an Indianapolis company.

UniCare, a division of WellPoint Inc., of Indianapolis, will take over Healthwave managed care services on Jan. 1, replacing FirstGuard, owned by Centene of St. Louis, despite concerns by doctors and hospitals that UniCare lacks a network of health providers in Kansas.

Centene filed an appeal a month ago with the Kansas Department of Administration claiming the Kansas Health Policy Authority didn't have authority to accept UniCare's bid for the Medicaid contract.

Centene's FirstGuard Health Plan Kansas Inc. has held the contract since 1999. The company claims the bidding process "was doomed from the start."

Chris Howe, director of the purchases division at the Department of Administration, defended the Kansas Health Policy Authority's decision in a letter Wednesday to Centene's attorneys.

"The timing of this procurement was somewhat peculiar in that the process was begun by an agency (Division of Health Policy and Finance with the Kansas Department of Administration), which would, pursuant to statute, become another agency (Kansas Health Policy Authority) before the process was completed," Howe wrote. "All DHPF's powers, duties, responsibilities, commitments, and staff transferred to the HPA on July 1, 2006. Therefore, although it was DHPF staff that began work with the Division of Purchases on RFP #09222, it was expected that staff would transfer to HPA before awards were made, and that HPA would be the agency making the award."

"Based upon the information provided in your letter and my review of the file, I support the award recommendation made by the Procurement Negotiating Committee," Howe wrote. "At this point in time, we will move forward with the contract award as it stands."

Jean Rumbaugh, president of FirstGuard Health Plan Kansas, said the company disagrees with Wednesday's decision by the Kansas Department of Administration.

"We remain concerned about the potential impact to our members," she said. "We are currently reviewing all available remedies, including our pending petition in Kansas state court against Andrew Allison, deputy director of the Kansas Health Policy Authority; Marcia Nielsen, executive director of the Kansas Health Policy Authority, and the Kansas Health Policy Authority seeking judicial review and injunctive relief."

In August, UniCare was awarded a contract to provide Medicaid services statewide. A separate contract was awarded to Children's Mercy Family Health Partners to serve the northeast and southeast regions of the state. The two contracts are worth about $250 million.

Dr. Marcia Nielsen, executive director of the Kansas Health Policy Authority, said by choosing these two vendors, it is anticipated that the state could save between $10 million and $15 million.

Insurance Commissioner Sandy Praeger said last week that UniCare wasn't yet licensed to do business in Kansas and has "a ways to go" before it is.

Praeger said she was concerned UniCare Health Plan of Kansas won't have enough time before the Jan. 1 start of its Medicaid contract to obtain a license to do business across the state.

Kansas Health Policy Authority spokeswoman Megan Ingmire said on Wednesday the agency was "still planning to start the contracts on Jan. 1."

Ingmire said many of the concerns of doctors and hospitals are being addressed by the transition team that includes members of the Kansas Hospital Association and the Kansas Medical Society.

"A provider network will be in place by Jan. 1 that is adequate to serve our beneficiaries," she said. "If it is not adequate, other plans will be made. "

Michael Hooper can be reached at (785) 295-1293 or michael.hooper@cjonline.com.